Vietnam probes for new clothing export markets
VOV.VN - Domestic clothiers, leather and shoemakers have actively begun to seek new markets on the back of sagging shipments to the EU and US economies, says the Vietnam Textile and Apparel Association (VITAS).
 |
“Although the EU and US are important regions for us, we are aggressively exploring new outlets for exports to reduce our dependence on these two economies,” said Vu Duc Giang, chairman of VITAS.
In the fallout from Brexit, we are seeing a particularly hefty drop in the number of orders coming in from EU bloc members, said Mr Giang, which we expect will continue over the near term.
The cause is multi-fold, he said, as a depreciated euro and sterling are making Vietnamese exports more expensive while at the same time making EU produced goods less costly and much more appealing.
Moreover, the decline in consumer confidence in the UK is weakening demand at both the macro and micro level.
Additionally, the preferential tariffs afforded producers in countries like Pakistan, Bangladesh, Laos, Myanmar and Cambodia under the EU ‘Generalized Scheme of Preferences’ makes their products more price attractive to consumers.
Currently, the import tariffs imposed on Vietnamese goods to the EU are nearly 10%, which for all intents and purposes will remain in effect even after the EU-Vietnam free trade region comes into play in mid-2018.
Overly complex rules of origin and yarn forward rules make complying with them cost prohibitive and it is doubtful that any domestic companies will be able to avail themselves of tariff free exports once the new economy is given effect.
Mr Giang cited official figures of the General Statistics Office that show clothing and textile exports in the first half of the year jumped 5.1% when compared to the first half of 2015 to US$10.7 billion.
Notably, said Mr Giang, this is the slowest rate of growth for the six-month period in the past three years.
Even more striking, he said, is that it puts the annual export target for 2016 of US$31 billion out of reach. With orders petering out, it is highly unlikely the shortfall of roughly US$20 billion can be made up in the remaining months of the year.
To make the target, sales would have to double that of the first six months of the year, a feat that just isn’t in the cards, said Mr Giang.
Le Tien Truong, vice chairman of VITAS, in turn underscored the importance of refocusing sales efforts in traditional markets such as the Republic of Korea and Japan and expansion into new markets including Russia and Eastern Europe.
However, he cautions that even the rise in the yen in the aftermath of Brexit could have an adverse impact on Vietnamese domestic exports of clothing and footwear to the Japanese market.
